Next warns of sharp UK sales slowdown amid economic pressures
- Next reported an increase in total revenues to £3.2 billion in the first half of the year, along with a 13.8% rise in pre-tax profits.
- The retailer warned of a significant decline in expected sales growth in the UK market, predicting only a 1.9% growth in the second half, down from 7.6%.
- Concerns over the UK economy and government policies were raised, with Next indicating the medium to long-term outlook remains unfavorable.
Next, a prominent clothing and homeware retailer based in the UK, recently announced its first-half trading results, reporting total revenues of £3.2 billion, marking a year-on-year increase of 10.3%. This positive performance included a 13.8% rise in pre-tax profits, totaling £515 million, aided by a boost in online sales following disruptions faced by a major competitor, Marks & Spencer. However, next faced challenges ahead as it projected a significant slowdown in UK sales growth in the second half of the year. Predictions indicated a drop in sales growth to just 1.9% from the prior 7.6%, revealing substantial concerns for its core market. Store-generated sales were particularly worrying, with expectations of a decline, while online sales growth forecast remained modest at 3.6%. The economic climate in the UK was described as increasingly unfavorable, with factors such as rising taxes, declining job opportunities, and stringent regulations impacting the retail sector. The CEO of Next, Lord Wolfson, expressed fears regarding the lasting implications of governmental policies on the economy, warning that the outlook remained bleak. Despite these hurdles, Next maintained its guidance for the full year, anticipating an overall revenue increase to £5.4 billion and a pre-tax profit of £1.1 billion, translating to a predicted annual growth of 9.3%. Analysts recognized Next's adaptability in the evolving retail landscape, particularly highlighting its successful online operations, though they emphasized the imperative of strengthening international sales to offset the challenges in the UK market.